IBM changes structure of retirement plans for employees

Company will match contributions annually rather than semi-monthly

Dec. 7, 2012

Written by

Dan D’Ambrosio

Free Press Staff Writer

IBM is changing the way it pays matching contributions for employees’ 401(k) plans, making one annual payment in December rather than semi-monthly payments throughout the year. The new policy goes into effect on Jan. 1.

In an e-mailed statement, Doug Shelton, director of IBM corporate communications, said Friday the change “reflects our continuing commitment to invest in our employee 401(k) plans while maintaining business competitiveness in a challenging economic environment.”

IBM matches employee contributions up to 6 percent of eligible pay for those hired before Jan. 1, 2005, and up to 5 percent for those hired after that date, according to Shelton.

Under the revised policy, IBM will make the single payment on Dec. 15 each year, according to an email sent on Dec. 5 to all U.S. employees by Randy MacDonald, senior vice president of human resources.

“You must be employed on December 15 of each year to receive your IBM contribution for that year,” the email states. “For eligible IBMers, the IBM match and automatic contribution will be deposited to your account on December 31, 2013 (and on the last business day of each subsequent year).”

The change in policy has angered IBM employees around the country, according to Lee Conrad, national coordinator for Alliance@IBM, an employees union organized under the Communication Workers of America.

“People feel once again that IBM is picking their pockets,” Conrad said Friday. “Everybody knows IBM cuts jobs right up until November. If you’re not employed by December 15, you don’t get that money.”

Conrad is a former 26-year IBM employee who left in 2000 to work full-time for Alliance@IBM. He said the union has about 300 members out of the estimated 84,500 IBM employees in the United States, but maintains the union has about 5,000 “supporters.”

“We are actively challenging IBM on issues such as this one,” Conrad said. “They know people are unhappy. How do you turn anger to organization, that’s the critical part. Without active members doing stuff we can’t move forward.”

Shelton declined to elaborate on the reasons behind the change by IBM beyond what he said in his prepared statement — that it was necessary to remain competitive.

Earl Mungeon, who has worked at the IBM plant in Essex Junction for 34 years, told the Burlington Free Press on Friday he was caught off-guard by the change in policy, but that he now believes the ultimate goal for the company is to stop making matching contributions to employees’ 401(k) plans.

“I didn’t foresee this one,” Mungeon said. “If it continues on, they’re going to cut the matching grant, and then cut it out completely.”